is there any truth in these tax estate sales at all? The infomercial on tv looks convincing, but as they say, If it sounds too good to be true, it probably is! Does any one know if this can be done? ANy legitimacy in this at all ? Thanks
If a municipality isn’t paid property taxes they can foreclose on the house to get paid. They have to severely delinquent (usually on the order of 2 years). The amount listed on the tax auction sites (most counties put their auction notices and the properties on line at the county web site – you don’t need infomercial material to do this, that’s just a rip off) is the amount that is owed to the municipality.
You have to read the auction notice and terms very, very carefully. Many times tax auctions do NOT wipe out other liens, meaning if there is a mortgage on the house you’d have to pay that off to get possession of the house. On top of that, many municipalities have rules about a redemption period. This redemption period is a period of time after the auction that the original owner can pay the taxes and ownership reverts back to them. This period can be a year or more in some places. That means you’d have to win the auction, pay the money, evict the previous owner (or get them to pay you rent), clear other liens on the property (including a mortgage?) and then wait for the redemption period to expire before it was truly yours. Sounds like a game that is a little too much for the average investor/part timer.
So the answer is – I’m sure it has happened that someone has bought a property for $300. It’s also true that people win the lottery – just not you. It would be incredibly rare for it to happen. You are right, if it sounds too good to be true, it probably is.
Another way to think about these things is to imagine it in reverse. You own a house (free and clear, let’s say) and you owe $300 in taxes. You’ve owed it for a long, long time. Are you really going to let it go for $300 in taxes? Wouldn’t you sell it first? Wouldn’t getting that $300 to save your house be a top priority? Of course it would be… You wouldn’t let someone else come in and ’steal’ your equity.
good luck!
February 27th, 2010 at 5:51 pm
If a municipality isn’t paid property taxes they can foreclose on the house to get paid. They have to severely delinquent (usually on the order of 2 years). The amount listed on the tax auction sites (most counties put their auction notices and the properties on line at the county web site – you don’t need infomercial material to do this, that’s just a rip off) is the amount that is owed to the municipality.
You have to read the auction notice and terms very, very carefully. Many times tax auctions do NOT wipe out other liens, meaning if there is a mortgage on the house you’d have to pay that off to get possession of the house. On top of that, many municipalities have rules about a redemption period. This redemption period is a period of time after the auction that the original owner can pay the taxes and ownership reverts back to them. This period can be a year or more in some places. That means you’d have to win the auction, pay the money, evict the previous owner (or get them to pay you rent), clear other liens on the property (including a mortgage?) and then wait for the redemption period to expire before it was truly yours. Sounds like a game that is a little too much for the average investor/part timer.
So the answer is – I’m sure it has happened that someone has bought a property for $300. It’s also true that people win the lottery – just not you. It would be incredibly rare for it to happen. You are right, if it sounds too good to be true, it probably is.
Another way to think about these things is to imagine it in reverse. You own a house (free and clear, let’s say) and you owe $300 in taxes. You’ve owed it for a long, long time. Are you really going to let it go for $300 in taxes? Wouldn’t you sell it first? Wouldn’t getting that $300 to save your house be a top priority? Of course it would be… You wouldn’t let someone else come in and ’steal’ your equity.
good luck!
References :
February 27th, 2010 at 6:27 pm
Yes, Rush is right. As an example, in my town a large apartment and commercial space (grocery store, service station) went behind on taxes, was seized by the town and auctioned for $1,240 a few years ago. Its fair market value was estimated at $380,000. For some reason the owner had simply refused to pay the property taxes, allowing the inevitable loss of his property and all of its value. A simple equity line of credit would have easily covered the taxes for several years, during which time the property could have been sold for its value rather than losing everything to stubbornness.
References :